The Role of the Media in the Launch of Internet Ipos

Bhattacharya , Utpal; Galpin, Neal; Yu, Xiaoyun; Ray, Rina

doi:10.2139/ssrn.897031

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The Role of the Media in the Launch of Internet Ipos

28 Pages Posted: 18 Apr 2006

See all articles by Utpal Bhattacharya

Neal Galpin

Monash University - Department of Banking and Finance

Shanghai Jiao Tong University (SJTU) - Shanghai Advanced Institute of Finance (SAIF); European Corporate Governance Institute (ECGI); National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER); China Academy of Financial Research (CAFR)

Rina Ray

University of Colorado at Denver

There are 2 versions of this paper

Date Written: May 24, 2006

Abstract

We document that there was media hype about internet stocks during the bubble. However, the media hype about internet stocks during the bubble was discounted: though the media coverage positively affected pre-IPO value revisions, it affected internet IPOs more than non-internet IPOs only after the bubble burst. Further, though the pre-IPO media coverage positively affected first-day returns only after the bubble burst, the effect on the internet IPOs was the same as the effect on the non-internet IPOs. This suggests that the media affect prices more in primary markets than in secondary markets. In both cases, the impact of the media is higher during bust times than during boom times.

Keywords: Initial public offering, media, underpricing, internet bubble

JEL Classification: E32, G14, G30

Suggested Citation: Suggested Citation

Bhattacharya, Utpal and Galpin, Neal E. and Yu, Xiaoyun and Ray, Rina, The Role of the Media in the Launch of Internet Ipos (May 24, 2006). Available at SSRN: https://ssrn.com/abstract=897031 or http://dx.doi.org/10.2139/ssrn.897031